Higher Error Rates And Lower Orders

Shares of the June IPO were trading at $5.12, down 17.87 percent for the day Thursday at publication.

“Significant” operational issues will lead to a second half 20 percent below the first, Goldman analyst Heath P. Terry said in a note.

“Until resolved, Blue Apron is decreasing ad spend by ~36% from 1H levels, driving some of the revenue reduction,” he added. “It is also experiencing higher churn and lower order rates due to higher error rates. This also delays the roll-out of the new products that growth reacceleration in 4Q and ‘18 was dependent on.”

“We were clearly wrong in our estimate of the logistical challenges of this transition and its ability to re-accelerate customer growth and engagement.”

He set a price target of $6. The IPO opened at $10, and Bloomberg was calling Blue Apron “the IPO bust of the decade” after it said it was losing customers.

And Now, The Good News

“We still view Blue Apron as the leader in the meal-kit delivery space and expect they will exit this period of hypercompetition in that same position given its scale vs. competitors,” Terry wrote. “Further, we believe that these logistical issues highlight the challenge subscale competitors face in the category. However, until management proves it can solve these operational issues we see little opportunity for outperformance.”